Whistleblower testifies before state senators on fairness of OIC

State senators on Monday heard testimony as to whether people and companies who challenge rulings by some state agencies are getting a fair shake.

Specifically, the Senate’s Law and Justice Committee held a work session to delve into the role of the administrative hearing officer that presides over disputes at the Office of the Insurance Commissioner. They were considering three ideas that could be shaped into proposed laws that would give the hearing officers greater independence when deciding cases.

The work session was held in response to a high-profile dispute in which the OIC’s Chief Presiding Officer Patricia Petersen says she was inappropriately contacted by an OIC official and pressured to decide cases in line with what Insurance Commissioner Mike Kreidler wanted.

Some of the cases in question could have significant impacts on key health-care policies. They include disagreements over which hospitals and providers must be included in an insurance plan’s network to ensure that customers have sufficient medical coverage.

The senators Monday were considering three proposals. One would require all OIC administrative hearings to come before the Office of Administrative Hearings, an independent venue for challenging decisions by state agencies. Another proposal would make decisions by the Office of Administrative Hearings final instead of sending them back to OIC, which is the current process. And a third proposal would, among other things, prohibit the sort of communication between OIC staff and hearing officers that Petersen objected to.

At the work session, Petersen read from a statement, saying that she has issued judgments in administrative hearings with the OIC for 28 years and that the independence of the position should be protected.

“It would be a travesty to allow Washington’s administrative justice system to operate in a manner which denies appellants their right to due process,” she said. “Parties must be able to trust that system, and if a judge is told by a party to decide his cases in a certain way … then this central pillar of our democratic society is corroded.”

Petersen filed a whistleblower complaint May 13 against James Odiorne, who as chief deputy insurance commissioner is second in command after Kreidler. Petersen alleged that Odiorne had broken state law by engaging in “ex parte communication” with her, which means he inappropriately discussed an ongoing case with her without all parties in the dispute being present.

She additionally alleged that Odiorne threatened her job if she failed to decide cases in support of the OIC.

A day after filing her complaint in May, Petersen was placed on administrative leave, while Odiorne has remained in his post. Her cases have been reassigned. The state auditor declined to investigate Petersen’s complaint.

The OIC has hired an independent investigator to examine what Kreidler claims is alleged misconduct on Petersen’s part. That investigation is scheduled to end in early July, OIC officials said Monday. Petersen earlier this month admitted to accidentally and anonymously emailing her whistleblower complaint to one of the attorneys involved in a case before her, which could constitute ex parte communication on her part.

Democratic senators attending the work session questioned why these issues were being discussed before the investigation was completed and called it an attack on Kreidler, who is also a Democrat.

“It’s a personnel matter,” said Sen. Adam Kline of Seattle. “This is not our business.”

But Tim Parker, a Seattle lawyer who has represented many clients before the OIC’s hearing officers, seemed to relish the chance to share his frustrations with the current system.

He recounted explaining to a client that they would be making their case against the OIC in front of an OIC hearing officer. The client was shocked and facetiously asked Parker if someone got a speeding ticket in Washington, would the police officer also be the judge?

“If the goal is to give someone accused of breaking the law and losing their livelihood or suffering a substantial fine a fair hearing, it doesn’t exist in any part of the process,” he said.

“Even if you have an independent-minded person serving in the insurance commissioner’s office as the presiding officer, they cannot prevent people from coming into their office to persuade them,” Parker added.

At the work session, OIC representatives were asked to describe the role of the hearing officer. AnnaLisa Gellermann, deputy commissioner of legal affairs with OIC, said that while the hearing officer must be “independent and unbiased,” it is appropriate for OIC staff to discuss a case with the officer, provided that staff member is not investigating or prosecuting the case.

Kreidler did not testify at Monday’s work session, but last week spoke about the duties of hearing officers, explaining that the person is his delegate and should know his position on issues related to the cases. He said that the hearings have changed in recent years and the cases often affect broader policy issues, including the Affordable Care Act, as opposed to cases that simply relate to an individual or company.

One of the cases cited in Petersen’s complaint involves a debate over whether Seattle Children’s Hospital must be included in insurance networks in order to provide customers with adequate coverage. The definition of allowable networks could have significant implications for insurance costs and rules in Washington, and even nationally, given the state’s leadership in implementing the Affordable Care Act.

“I don’t need to delegate [the duties of hearing officer] to anybody else, but if I do delegate it to somebody, I would like think they’d be aware of how the office operates and what my thinking is for why I’m taking a particular approach,” Kreidler said Friday.

“Otherwise you run the potential of having an administrative hearing officer who could effectively, with no accountability whatsoever, effectively undo what I was trying to accomplish with the Affordable Care Act in the state of Washington.”

Parker, the Seattle attorney, questioned whether administrative hearings was the appropriate venue for making policy.

About the blog

HealthCare Checkup is a new blog dedicated to helping readers understand the Affordable Care Act and how the federal health-care law affects everyone – insured or not. Reporters in Seattle, Olympia, and Washington, D.C. contribute. The editors are Beth Kaiman and Mark Watanabe.

The blog is produced through a partnership with Kaiser Health News, an editorially independent part of the Kaiser Family Foundation, a health policy research and communication organization that is not affiliated with Kaiser Permanente.